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EXHIBIT 10.18
AGREEMENT AMONG GUARANTORS
This Agreement Among Guarantors (the "Agreement") is made and entered
into as of November 16, 1998, by and among Xxxxxxx X. Xxxx ("Xxxx"), Xxxxx X.
Xxxxx ("Ruyan") Xxxx X. Xxxxxx ("Xxxxxx") (also each a "Guarantor"), and Cafe
Odyssey, Inc., a Minnesota corporation (the "Company").
INTRODUCTION
A. The Company is a party to a Loan Agreement dated October 9, 1996
with PNC Bank, Ohio, National Association, as amended (the "PNC Loan
Agreement").
B. As of September 23, 1998, the Company entered into a Revolving
Promissory Note (the "Note") with The Provident Bank, an Ohio banking
corporation ("Provident") in order to retire the Company's indebtedness under
the PNC Loan Agreement and obtain additional financing (collectively, the
"Provident Financing"). The Provident Financing consists of a first tranche in
the principal amount of $1,000,000 (the "First Tranche") and a subsequent or
concurrent second tranche in a principal amount of up to $2,000,000 (the "Second
Tranche").
C. In connection with the Company's borrowing under the First Tranche,
Provident required guarantors to execute a $1,000,000 Joint and Several Limited
Unconditional Guaranty (the "First Tranche Guaranty") of the Note. Each of the
Guarantors has executed the First Tranche Guaranty.
D. In connection with the Second Tranche, Provident required guarantors
to execute Several Limited Guarantees (each, a "Second Tranche Guaranty") of the
Note and pledge certain assets to Provident. King and Ruyan have each executed a
$500,000 Second Tranche Guaranty and Xxxxxx has executed a $1,000,000 Second
Tranche Guaranty.
E. In consideration of the Guarantees and the pledge of collateral by
the Guarantors, the Company wishes to issue to each of the Guarantors a warrant
to purchase shares of the Common Stock, $.01 par value (the "Common Stock"), of
the Company (individually a "Warrant" and collectively the "Warrants").
F. The Guarantors and the Company also desire to provide for the
issuance of additional Warrants to the Guarantors if the Company does not repay
the Note on a timely basis.
G. The Guarantors desire to remedy the inequities that may otherwise
result from enforcement of any of the Guarantees through an agreement providing
for appropriate indemnification and contribution rights and obligations among
the Guarantors.
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NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Guarantors hereto agree as follows:
1. Guarantees, Collateral and Supplemental Collateral. On or
before the date hereof, each Guarantor has executed the First Tranche Guaranty,
a Second Tranche Guaranty and a Pledge and Security Agreement (a "Pledge") in
connection therewith.
2. Issuance of Warrants upon Execution of Guarantees and Pledges.
(a) In connection with the First Tranche, the Company shall
issue to each Guarantor a Warrant to purchase 40,000 shares of Common Stock in
the form attached as Exhibit A hereto.
(b) In connection with the Second Tranche, the Company shall
issue to each Guarantor a Warrant to purchase 200,000 shares of Common Stock
(except that Xxxxxx shall receive a Warrant to purchase 400,000 shares) in the
form attached as Exhibit A hereto.
3. Issuance of Warrants upon Company's Failure to Timely Repay the Note.
If the Company does not repay the Note in full on or before September 30, 1999
(the "Due Date"):
(a) the Company shall issue to each of King and Ruyan a Warrant
to purchase 30,000 shares of Common Stock in the form attached as Exhibit A
hereto. Thereafter, for so long as any amount due under the Note shall remain
unpaid, on each monthly anniversary of the Due Date, the Company shall issue to
each of King and Ruyan a Warrant to purchase 30,000 shares of Common Stock in
the form attached as Exhibit A hereto;
(b) the Company shall issue to Xxxxxx a Warrant to purchase
50,000 shares of Common Stock in the form attached as Exhibit A hereto.
Thereafter, for so long as any amount due under the Note shall remain unpaid, on
each monthly anniversary of the Due Date, the Company shall issue to Xxxxxx a
Warrant to purchase 50,000 shares of Common Stock in the form attached as
Exhibit A hereto;
(c) the Company shall pay each of King and Ruyan $7,500 on the
Due Date, $15,000 on the first monthly anniversary of the Due Date, $22,500 on
the second monthly anniversary of the Due Date and $30,000 on the third and each
subsequent monthly anniversary of the Due Date until the Note is paid in full;
and
(d) the Company shall pay Xxxxxx $12,500 on the Due Date,
$25,000 on the first monthly anniversary of the Due Date, $37,500 on the second
monthly anniversary of the Due Date and $50,000 on the third and each subsequent
monthly anniversary of the Due Date until the Note is paid in full.
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4. Company Liability for Payments on Guarantees. Upon a
Guarantor's payment of any loss, claim, damage, expense or liability arising
under the Note (each a "Claim"), the Company shall be obligated to immediately
reimburse such Guarantor for the full amount of such payment. In order to secure
its obligation pursuant to this Section, the Company shall execute a Security
Agreement in the form attached as Exhibit B hereto.
5. Indemnification.
(a) It is the intention of this Agreement that no Guarantor
shall be liable for more than his share of a Claim, as set forth in subsection
(b) of this Section. Accordingly, each Guarantor (in such capacity an
"Indemnifying Guarantor") hereby agrees to indemnify and hold harmless the other
Guarantors (in such capacity an "Indemnified Guarantor") from and against any
Claim which is not reimbursed by the Company pursuant to Section 4 hereof to the
extent, and only to the extent, that such Claim exceeds the Indemnified
Guarantor's share of such Claim. Upon any Guarantor's payment of a Claim, such
Guarantor shall deliver notice thereof (the "Notice of Claim") in reasonable
detail to the Company and to each of the other Guarantors. Within five (5)
business days following receipt of the Notice of Claim, each Guarantor required
to make an indemnification payment pursuant to this Section shall deliver the
same by certified check to the Guarantor who paid such Claim. Each Indemnifying
Guarantor shall also reimburse the Indemnified Guarantor for all costs
(including, without limitation, attorneys' fees) of collecting amounts due the
Indemnified Guarantor pursuant to this Section from such Indemnifying Guarantor.
(b) Each Guarantor's share of a Claim shall be determined as
follows:
(1) If the Claim was made under the First Tranche Guaranty,
King's, Ruyan's and Xxxxxx'x shares shall be one-third each.
(2) If the Claim was made under a Second Tranche Guaranty,
King's and Ruyan's shares shall be one-fourth each and Xxxxxx'x share shall be
one-half.
6. Contribution.
(a) If and to the extent that the remedies provided in Section
5 hereof to an Indemnified Guarantor are insufficient due to the Insolvency (as
defined in subsection (b) below) of any Indemnifying Guarantor, the Indemnified
Guarantor shall be entitled to a contribution from each solvent Indemnifying
Guarantor such that the aggregate of such contributions totals the excess of the
Indemnified Guarantor's payment of such Claim over such Indemnified Guarantor's
share of such Claim (for this purpose, such share shall be calculated by
allocating the amount of the Claim among the solvent Guarantors based upon the
percentage shares set forth in Section 5(b)). The Indemnified Guarantor shall
deliver a request for contribution (the "Contribution Request") in reasonable
detail to the Company and to each of the solvent Indemnifying Guarantors
regarding his or her right to contribution hereunder. Within five (5) business
days following receipt of the Contribution Request, each solvent Indemnifying
Guarantor required to make a contribution payment pursuant to this Section shall
deliver the same by certified check to such Indemnified Guarantor.
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(b) An Indemnifying Guarantor shall be deemed "Insolvent" if
such Indemnifying Guarantor (i) applies for or consents to the appointment of a
receiver, trustee, or liquidator, (ii) is unable, or admits in writing his or
her inability to pay debts as they mature, (iii) makes a general assignment for
the benefit of creditors, (iv) is adjudicated bankrupt or insolvent; (v) files a
voluntary petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or to take advantage of any
insolvency law; or (vi) fails to successfully dismiss an involuntary petition
filed against him or her.
7. Draws under Provident Financing. The Chairman of the Board of
the Company, in his or her sole discretion, shall determine the amount and
timing of draws to be made under the Provident Financing, subject to the
aggregate amounts set forth in paragraph B. above.
8. Amendment, Waiver and Third Party Beneficiaries. This Agreement
may not be amended orally, but only by an instrument in writing signed by all of
the Guarantors who are parties hereto. No delay or failure on the part of any
Guarantor to exercise any power or right hereunder shall operate as a waiver
thereof, nor as an acquiescence in any default, nor shall any single or partial
exercise of any power or right preclude any other or further exercise thereof,
or the exercise of any other power or right. The Guarantors acknowledge and
agree that this Agreement is not intended to create any third party beneficiary
rights.
9. Partial Invalidity. If any provision or application of this
Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not effect other provisions or applications which can be
given effect, and this Agreement shall be construed as if the lawful and
unenforceable provision or application had never been contained hereby or
prescribed hereby.
10. Governing Law, Submission to Jurisdiction. All questions
concerning the construction, validity and interpretation of this Agreement will
be governed by and construed in accordance with the internal law, and not the
law of conflicts of law, of the State of Minnesota. Each of the parties hereto
consents and agrees to the jurisdiction of any state court sitting in the City
of Minneapolis, State of Minnesota, or any federal court sitting in the city of
Minneapolis, State of Minnesota, and waives any objection based on venue or
forum non conveniens with respect to any action instituted therein.
11. Assignment. This Agreement shall be binding upon the Guarantors
and their successors and assigns and shall inure to the benefit of the
Guarantors and their successors and assigns.
12. Integration. This Agreement contains the full, final and
exclusive statement of the agreement between the Guarantors relating to all
matters set forth herein and supersedes all other oral and written
understandings to the contrary.
13. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken together
will constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
CAFE ODYSSEY, INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
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Title: Chief Executive Officer
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/s/ Xxxxxxx X. Xxxx
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XXXXXXX X. XXXX
/s/ Xxxxx X. Xxxxx
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XXXXX X. XXXXX
/s/ Xxxx X. Xxxxxx
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XXXX X. XXXXXX
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EXHIBIT A
[WARRANT]
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EXHIBIT B
SECURITY AGREEMENT
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